The group's revenue for the year ended 31 December 2018 was £78.6 million, an increase of £7.3 million, or 10.2%, compared with the same period last year. This increase had a more than proportionate impact on operating profit which increased by 17.6%, or £3.1 million, from £17.6 million last year to £20.7 million in the year under review. This increase, which follows a 11.2% increase last year, reflects strong and improved performances from both our hire and sales businesses in the UK and Europe and a strong and stable performance from our business in the Middle East.

Net finance income was £0.4 million this year compared with net finance costs of £0.3 million in 2017. This is largely attributable to a foreign exchange gain arising on the retranslation of inter-company balances of £0.3 million this year compared with a loss of £0.3 million in 2017. This reflects further weakening of Sterling compared with both the Euro and UAE Dirham.

The group has reported an increase in the basic earnings per share of 7.02p, or 21%, from 33.37p in 2017 to 40.39p in the current year. This is mainly attributable to the above improvement in the group's operating profit which has enhanced the quality of earnings. The growth in the basic EPS is indicative of the underlying business performance and strength of the group.

The group continues to generate strong cash flows. Net cash inflow from operating activities was £19.1 million compared with £17.9 million last year. Despite shareholder related cash outflows of £10.5 million on ordinary dividends and share buybacks, net funds increased by £3.1 million from £20.3 million at 31 December 2017 to £23.4 million at 31 December 2018.

Our policy of returning affordable dividends to shareholders continues and, over the last five financial years, the group has paid £50.3 million in cash to shareholders. This has not been at the

expense of our other obligations; the group pays its external creditors in accordance with their agreed credit terms, it operates well within its banking covenants and has met its obligations as they fall due to fund the defined benefit pension scheme. Therefore, in the light of the improved operating profit and substantial net funds that are available, the Board is once again proposing a further final dividend payment amounting to £5.0 million which, if approved at the forthcoming AGM, will be paid in June 2019.

Cost control, cash and working capital management continue to be priorities for the group. Capital expenditure is concentrated on assets that give a good return and in total £7.5 million was invested in the hire fleet this year, £0.6 million more than last year and significantly more than the wasting depreciation charge of £5.9 million. In addition, the group invested a further £1.1 million in property, plant and equipment. These actions will ensure that the group's infrastructure and revenue generating assets are sufficient to support future growth and profitability. Hire fleet utilisation, condition and availability continue to be the subjects of management focus.

Operating performance

The following table splits the results between the first and second half years:

Turnover

Operating profit

£'000

£'000

1st half 2018

37,815

9,280

1st half 2017

35,334

8,171

2nd half 2018

40,748

11,401

2nd half 2017

35,966

9,418

Total 2018

78,563

20,681

Total 2017

71,300

17,589

/

The above table demonstrates that the successful performance in the first half of the year continued into the second half. Turnover in the first half of the year showed a 7.0% improvement over the same period in 2017 and, in the second half, the percentage improvement increased to 13.3%. Operating profit for the first half year showed a 13.6% improvement compared with the same period in 2017 and a 21.1% improvement for the second half year. Traditionally, the group makes more profit in the second half year due to the higher profit margins on its air conditioning products which are hired predominantly in the second half of the year. The effect this year was even more pronounced than normal due to the long and hot summer throughout Northern Europe providing excellent opportunities for this area of our business.

The operating profit of our main business segment in the UK and Northern Europe increased from £15.2 million last year to £19.1 million in the year under review. During the first quarter a period of very cold weather created good opportunities for our heating and boiler hire activities and this was followed by a long hot summer which provided excellent opportunities for our air conditioning and chiller products. The group's management team took advantage of the opportunities presented to them and the improved profitability would not have been forthcoming without the considerable efforts of all our staff. The pumping business again performed well following continued success over recent years. Our traditional businesses continue to be developed and supported by the expansion of non-weather dependent niche markets which benefit the performance of our specialist hire divisions. This year's result demonstrates that with properly directed investment, a well maintained hire fleet, a knowledgeable management team and dedicated employees we are able to take full advantage of opportunities when they are presented to us and deliver a strong performance for the benefit of all shareholders.

Our hire and sales business in the Middle East had another satisfactory trading year. Although the operating profit for this business segment reduced from £2.9 million in 2017 to £2.4 million in the current year, the majority of this reduction occurred in the first half of the year. Trading showed a significant improvement in the second half of the year..

Our fixed installation business sector in the UK returned a reduced operating profit of £0.1 million this year compared with £0.4 million in 2017. The market continues to be fragmented with high levels of price competition.

Central overheads were £0.9 million in both the current year and 2017.

Profit for the financial year

Profit before tax was £21.1 million this year compared with £17.3 million last year, an increase of £3.8 million. This is attributable to the above £3.1 million increase in operating profit which is supplemented by a swing in finance costs from a net charge of £0.3 million last year to a net credit of £0.4 million this year. This was primarily due to foreign exchange rate movements as discussed above.

Tax charges increased from £3.2 million in 2017 to £4.0 million this year. The overall effective tax

rate increased from 18.4% in 2017 to 19.0%, primarily due to a change in mix of profits with a greater percentage of the group's profits being earned in Europe this year compared with the Middle East where corporation tax rates are very low. A detailed reconciliation of the theoretical corporation tax charge based on the accounts profit multiplied by 19% and the actual tax charge is given in note 11 to the consolidated financial statements. Profit for the financial year was £17.1 million compared with £14.1 million last year.

Equity dividends

The company paid two dividends during the year. On 25 June 2018, a final dividend for the year ended 31 December 2017 of 11.9 pence per ordinary share was paid and this was followed on 9 November 2018 by the payment of an interim dividend for 2018, also of 11.9 pence per share. Therefore, during 2018, a total of £10.1 million in cash dividends has been returned to our ordinary shareholders.

I am pleased to announce that, in view of the group's ongoing profitability and its significant cash resources, the Board has proposed a final dividend for 2018, also of 11.9 pence per ordinary share. If approved at the forthcoming Annual General Meeting this dividend, which in total amounts to £5.0 million, will be paid on 21 June 2019 to shareholders on the register as at 31 May 2019.

Share buybacks

The company purchased 87,723 of its own one pence ordinary shares for cancellation during the period for a consideration of £0.4 million. This purchase enhanced earnings per share and was for the benefit of all shareholders. As at 9 May 2019, there remained an outstanding general authority for the directors to purchase 5,195,037 ordinary one pence shares that was granted at last year's Annual General Meeting.

The Board believes that it is in the best interests of shareholders if it has this authority in order that market purchases may be made in the right circumstances if the necessary funds are available. Accordingly, at the next Annual General Meeting, shareholders will be asked to vote in favour of a resolution to renew the general authority to make market purchases of up to 12.5% of the ordinary share capital in issue.

Net funds

At 31 December 2018, the group had net funds of £23.4 million compared with £20.3 million last year, an increase of £3.1 million despite shareholder related cash outflows of £10.5 million on ordinary dividends and share buybacks during the year.

Bank loan facilities

The group continues to operate within its bank covenants. In April 2017 a bank loan of £5 million was taken out with the group's bankers, Royal Bank of Scotland. The first loan repayment of £0.5 million was made in accordance with the bank agreement on 30 April 2018. The remaining balance of £4.5 million will be repaid by three equal annual instalments of £0.5 million per annum commencing on 30 April 2019 followed by a final balloon repayment of £3 million due on 30 April 2022.

Outlook

The group's policy to increase investments in new technologically advanced and environmentally friendly non-seasonal products will be continued into 2019. Investments will also continue in our traditional businesses to ensure we are ready to support our customers in times of extreme weather conditions.

The group continues to face both challenges and opportunities in all of its geographical markets but our business remains strong, cash generative and well developed, with positive net funds. The Board remains mindful of the favourable or adverse impact that the weather can have on our business.

JG Murray

Chairman

9 May 2019

Andrews Sykes Group plc

Consolidated Income Statement

For the 12 months ended 31 December 2018

12 months

ended

31 December

2018

£'000

12 months

ended

31 December

2017

£'000

Continuing operations

Revenue

Cost of Sales

78,563

(31,908)

71,300

(30,086)

Gross profit

46,655

41,214

Distribution costs

(12,073)

(11,571)

Administrative expenses

(13,901)

(12,054)

Operating profit

20,681

17,589

EBITDA*

Depreciation and impairment losses

Profit on the sale of plant and equipment

26,737

(6,666)

610

22,851

(5,917)

655

Operating profit

20,681

17,589

Finance income

Finance costs

461

(97)

82

(386)

Profit before taxation

21,045

17,285

Taxation

(3,999)

(3,184)

Profit for the financial period attributable to equity holders of the parent

17,046

14,101

There were no discontinued operations in either of the above periods

Earnings per share

Basic (pence)

40.39p

33.37p

Diluted (pence)

40.39p

33.37p

Interim and final dividends paid per equity share (pence)

23.80p

23.80p

Proposed final dividend per equity share (pence)

11.90p

11.90p

* Earnings Before Interest, Taxation, Depreciation, profit on the sale of property, plant and equipment, Amortisation and non-

recurring items.

Andrews Sykes Group plc

Consolidated Statement of Comprehensive Total Income

For the 12 months ended 31 December 2018

12 months

ended

31 December

2018

£'000

12 months

ended

31 December

2017

£'000

Profit for the financial period

17,046

14,101

Other comprehensive (charges) / income

Items that may be reclassified to profit and loss:

Currency translation differences on foreign operations

405

(2)

Items that will never be reclassified to profit and loss:

Remeasurement of defined benefit assets and liabilities

(1,649)

1,391

Related deferred tax

313

(264)

Other comprehensive (charges) / income for the period net of tax

(931)

1,125

Total comprehensive income for the period

16,115

15,226

Andrews Sykes Group plc

Consolidated Balance Sheet

As at 31 December 2018

31 December 2018

31 December 2017

£'000

£'000

£'000

£'000

Non-current assets

Property, plant and equipment

23,651

21,911

Lease prepayments

45

47

Deferred tax asset

677

102

Retirement benefit pension surplus

1,356

3,364

25,729

25,424

Current assets

Stocks

5,083

3,860

Trade and other receivables

19,994

17,852

Cash and cash equivalents

27,862

25,311

52,939

47,023

Current liabilities

Trade and other payables

(12,889)

(12,358)

Current tax liabilities

(2,294)

(1,696)

Bank loans

(493)

(493)

Obligations under finance leases

(5)

(43)

(15,681)

(14,590)

Net current assets

37,258

32,433

Total assets less current liabilities

62,987

57,857

Non-current liabilities

Bank loans

(3,983)

(4,475)

Obligations under finance leases

-

(7)

(3,983)

(4,482)

Net assets

59,004

53,375

Equity

Called-up share capital

423

423

Share premium

13

13

Retained earnings

54,013

48,789

Translation reserve

4,300

3,895

Other reserves

246

245

Surplus attributable to equity holders of the parent

58,994

53,365

Non-controlling interests

10

10

Total equity

59,004

53,375

Andrews Sykes Group plc

Consolidated Cash Flow Statement

For the 12 months ended 31 December 2018

12 months

ended

31 December

2018

£'000

12 months

ended

31 December

2017

£'000

Cash flows from operating activities

Cash generated from operations

22,888

21,090

Interest paid

(88)

(84)

Net UK corporation tax paid

(2,236)

(2,142)

Overseas tax paid

(1,454)

(1,002)

Net cash flow from operating activities

19,110

17,862

Investing activities

Sale of property, plant and equipment

944

861

Purchase of property, plant and equipment

(7,142)

(5,790)

Interest received

41

51

Net cash flow from investing activities

(6,157)

(4,878)

Financing activities

Loan repayments

(500)

(5,000)

New loans raised

-

4,973

Finance lease capital repayments

(45)

(101)

Equity dividends paid

(10,048)

(10,058)

Purchase of own shares

(438)

-

Net cash flow from financing activities

(11,031)

(10,196)

Net increase in cash and cash equivalents

1,922

2,788

Cash and cash equivalents at the beginning of the period

25,311

22,819

Effect of foreign exchange rate changes

629

(296)

Cash and cash equivalents at the end of the period

27,862

25,311

Reconciliation of net cash flow to movement in net funds in the period

Net increase in cash and cash equivalents

1,922

2,788

Cash outflow from the repayment of loans and finance leases

545

5,101

Cash inflow from the drawdown of new loans net of charges

-

(4,963)

Non-cash movement in respect of raising loan finance

(8)

(10)

Increase in net funds during the period

2,459

2,916

Opening net funds at the beginning of the period

20,293

17,673

Effect of foreign exchange rate changes

629

(296)

Closing net funds at the end of the period

23,381

20,293

Andrews Sykes Group plc

Consolidated Statement of Changes in Equity

For the 12 months ended 31 December 2018

Attributable to equity holders of the parent company

Minority

interest

Total

equity

Share

capital

£'000

Share

Premium

£'000

Retained

earnings

£'000

Translation reserve

£'000

Other

reserves

£'000

Total

£'000

£'000

£'000

At 31 December 2016

423

13

43,619

3,897

245

48,197

10

48,207

Profit for the financial period

-

-

14,101

-

-

14,101

-

14,101

Other comprehensive income and (charges):

Items that may be reclassified to profit and loss:

Currency translation differences on foreign operations

-

-

-

(2)

-

(2)

-

(2)

Items that will never be reclassified to profit and loss:

Remeasurement of defined benefit assets and liabilities

-

-

1,391

-

-

1,391

1,391

Related deferred tax

-

-

(264)

-

-

(264)

-

(264)

Total other comprehensive income and (charges)

-

-

1,127

(2)

-

1,125

-

1,125

Transactions with owners recorded directly in equity:

Dividends paid

-

-

(10,058)

-

-

(10,058)

-

(10,058)

Total transactions with owners

-

-

(10,058)

-

-

(10,058)

-

(10,058)

At 31 December 2017

423

13

48,789

3,895

245

53,365

10

53,375

Profit for the financial period

-

-

17,046

-

-

17,046

-

17,046

Other comprehensive (charges) and income:

Items that may be reclassified to profit and loss:

Currency translation differences on foreign operations

-

-

-

405

-

405

-

405

Items that will never be reclassified to profit and loss:

Remeasurement of defined benefit assets and liabilities

-

-

(1,649)

-

-

(1,649)

(1,649)

Related deferred tax

-

-

313

-

-

313

-

313

Total other comprehensive (charges) and income

-

-

(1,336)

405

-

(931)

-

(931)

Transactions with owners recorded directly in equity:

Purchase of own shares

(1)

-

(438)

-

1

(438)

-

(438)

Dividends paid

-

-

(10,048)

-

-

(10,048)

-

(10,048)

Total transactions with owners

(1)

-

(10,486)

-

1

(10,486)

-

(10,486)

At 31 December 2018

422

13

54,013

4,300

246

58,994

10

59,004

Andrews Sykes Group plc

Notes

For the 12 months ended 31 December 2018

1. Basis of preparation

Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs. Therefore the financial information set out above does not constitute the company's financial statements for the 12 months ended 31 December 2018 or 31 December 2017 but it is derived from those financial statements.

2. Going Concern

The Board remains satisfied with the group's funding and liquidity position. The group has operated throughout the 2018 financial year and until the date of signing these accounts within its financial covenants as contained in the bank agreement.

Both loan capital and interest payments have been made in accordance with the bank agreements. The first annual repayment due in accordance with the loan agreement dated 30 April 2017 of £0.5 million was made on 30 April 2018. The group's profit and cash flow projections indicate that the financial covenants included within the new bank loan agreement will be met for the foreseeable future.

The group continues to have substantial cash resources which at 31 December 2018 amounted to £27.9 million compared with £25.3 million as at 31 December 2017. Profit and cash flow projections for 2019 and 2020, which have been prepared on a conservative basis taking into account reasonably possible changes in trading performance, indicate that the group will be profitable and generate positive cash flows after loan repayments. These forecasts and projections indicate that the group should be able to operate within the new bank facility agreement and that all associated covenants will be met.

The Board considers that the group has considerable financial resources and a wide operational base. As a consequence, the Board believes that the group is well placed to manage its business risks successfully, as demonstrated by the current year's result, despite some uncertain external influences.

After making enquiries, the Board has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Board continues to adopt the going concern basis when preparing the Annual Report and Financial Statements from which this preliminary announcement is derived.

3. Distribution of Annual Report and Financial Statements

The group expects to distribute copies of the full Annual Report and Financial Statements that comply with IFRSs by 17 May 2019 following which copies will be available either from the registered office of the company; St David's Court, Union Street, Wolverhampton, WV1 3JE; or from the company's website; www.andrews-sykes.com. The Annual Report and Financial Statements for the 12 months ended 31 December 2017 have been delivered to the Registrar of Companies and those for the 12 months ended 31 December 2018 will be filed at Companies House following the company's Annual General Meeting. The auditor has reported on those financial statements; the report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain details of any matters on which they are required to report by exception.

4. Date of Annual General Meeting

The group's Annual General Meeting will be held at 10.30 a.m. on Tuesday, 18 June 2019 at 2 Eaton Gate, London, SW1W 9BJ.

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